If I don’t need a mortgage, should I buy a house this year, or wait and hope prices drop

[Colourmylifewith]

I’m really undecided. I don’t need to sell and won’t need a mortgage (for the right price) I’m in the north and just can’t decide if now is a good time. The house I would be able to get would be smallish, prob terrace or semi with a small garden, but it would be a home for us, would it be unreasonable to buy at the moment? I just don’t want to buy at a bad time and think if prices drop I could maybe get something slightly bigger? Any help appreciated

Interesting point re new builds, that seems to be the case around here too. I really wish I’d bought pre covid as you did. But live and learn I suppose 😐

I think that people get too caught up in what "the market" is doing. You are not buying "the market", you are buying one particular house. Keep looking and if you see that one particular house (great bargain or a great location or ticks all your boxes or whatever) then go for it.
You are in an enviable position if you are a cash buyer - you don't need to worry about your mortgage offer expiring so you can work to your own timetable.
Keep your eyes and ears peeled, get on EAs' lists and pounce when the time is right. Meanwhile, save like mad!

Thank you for this, I’ve got myself all worked up today about it 🙄 thinking nothing will come along etc etc- your perspective helps, I appreciate it

My home has gone down on a zoopla estimate quite considerably (270k to 240k) and houses locally seem to be not selling over 300k so I'd look at snapping up now.

I've currently found my dream home (needs loads of altering but the potential is limitless) but I can't afford it right now. So I should stop rightmove stalking it. 😂

I’m terrible for right move stalking!! I’m not sure it’s doing me any good!! 😂

I would love to claim there was some sort of skill involved, shrewd market analysis - but to be honest it was nothing more than complete luck.

House prices seem to still be rising here. People just seem happier to wait for the right price rather than selling the same day like last year. Most people would not be willing to sell their houses for significantly less, so if prices crash choice of properties will too. I thought I sold my house for way over what it was worth in 2021, it sold for £45,000 more this year (a 2 bed semi in the north).

I think it might be an addiction at this point 😂😂

Hold on I'll just go get my crystal ball....
🔮
There we are, make a wish🌬️
50 quid a go💰💰💰

You definitely did the right thing! Good decision making at least, i dither about too much!!!

Today I’m WFH and clicking between Rightmove and mumsnet!! 😂

We bought our first house in 2017. We were told it was a bad time because house prices would fall because of Brexit, the Covid. Then the cost of living and interest rates rose and people have been predicting a fall in prices. We’ve sold stc and the agreed sale price is £80k more than we paid for it 6 years ago. It went for over asking price and I’m not seeing any evidence of the market falling locally, although this does seem to vary.

A falling market effects people with mortgages who need to move. It basically prices them out of the market or leaves them with huge debt. As a cash buyer, if the value of your house falls so does everything else. I would say if you’re worried about falling house prices, get something you can live in for the next 10 years which should wait out any falls in the market. If your cash will allow you to purchase a house that meets those requirements then great. Otherwise I guess you consider buying somewhere bigger with a small mortgage and large deposit, which will open you up to lower interest rates.

That’s what I was thinking.

Have a look on Rightmove. I was looking, just out of interest as I don't think I can persuade DH to move, and lots of places being reduced after being on for 2 or 3 months. It must vary by area but if you know where you are looking that might give you an idea.

If you're anywhere near me (North West, M65 corridor), I doubt house prices will drop significantly enough to make much difference. They seem to be fairly consistent around here, though the press seem to be publishing lots of positive items about the benefits of living here and how cheap the houses are, so if anything I'm expecting prices to go up due to increased demand from people being priced out of Manchester. I would buy now if I hadn't already (though I still haven't kicked my Rightmove addition either).

People will blithely tell you to hop on the housing market. It has never failed them, because it's been propped up for over a decade. They don't think about it carefully or do the maths. But the fact is that prices do fall - in 2008 by nearly 20% - and they are falling in most countries right now. I'd be gutted if I bought in 2007 rather than 2009. There's only so much more propping up that the government can do, and wobbles in other countries could affect the foreign investment that has pushed prices up recently.

Reports of an upturn are also very premature. This was reported by building societies in Feb and march too but when the actual government figures came in prices had continued to fall.

The point that someone made about cash losing value in a savings account due to inflation is worth considering. However if the main asset you wish to buy is actually decreasing in value then effectively you're in your own little deflationary bubble and your cash is effectively gaining value (and the interest you earn can help pay your rent).

I'm in no way confident about my future-predicting abilities and will certainly be getting my ducks in a row, as they like to say on here; but I won't be buying this month that's for sure. I'll be waiting for the government figures on April (and probably May as well).

But if the OP has a big chunk of cash set aside for the house purchase then presumably that money is invested somewhere with a decent return (interest rates being high ATM), maybe even a big enough return to pay the entire rent.

Where I live, annual rent costs about 4% of the price of a house, which is similar to the return from a bank account.

Do you own or rent at the moment?

@Walldoorwindow I bought in 2007 and was never, ever gutted. I bought the house to live in it, not to turn around and sell. I sold that house in 2020 (before the boom). So I bought in a high priced market, sold in a regular priced one and still made a nice profit.

I bought immediately, again before the boom. This house now would easily sell for 15% more than I paid. It will fluctuate, but I have no intent to sell any time soon and have a very low fixed interest rate.

I’d be avoiding these high Interest rates if I were looking now, but OP has cash. She’s not exactly in the same category as someone borrowing to buy. The UK is in a housing crisis; supply is not likely to meet demand again any time soon. The OP should consider that above all. She sounds like she’s currently renting; throwing away cash she could be putting into a home.

Depends what's worth it to you. If you're looking at something small the house price fluctuations matter less, especially with no mortgage and if you're planning on being there for several years. If you buy a £100K house and prices drop 5%, its still worth 95K and will probably be back up to at least the 100K within the next 10 years or so. Even if not, considering the cost of rent and mortgage, 5K to live 10 years in a house you love is really nothing. If you were looking at a £700K house then a 5% drop is 35K down, which is much more substantial and a mortgage on that would be more risky on the interest rate side.

People have been saying they're going to drop for years, predictions can be (and often are recently) wrong. I'm in the north and house prices are still increasing here. They could still drop of course, could stagnate. Even a drop could be small.

Many experts are predicting a fall of around 10% over the next year which is a lot more than a typical rent (particularly when mortgage interest is factored in)
But house prices have started to rise again. I doubt they will fall by another 10% they could rise again as inflation is expected to fall to more normal levels by the end of the year.
It's impossible to tell what will happen but in the long term house prices always increase so if your planning to stay in the house for sometime the prices becomes irrelevant.
I would look for something you want and if the price seems reasonable and you can afford it go for it. You are in a good position being a cash buyer

Zoopla is often innacurate tbh.

Problem is a lot of people in the market weren't born when the last serious crash happened (mid 1990s).

There was a bit of a correction in 2008, but generally the market was propped up by the government.

I think generally politicians feel a falling market is extremely bad for their re-election prospects. So given the chance of the market falling, or stuffing a few billion into mad schemes like Help to Buy, the government will always find the cash.

However, maybe one day, and maybe not too far away, prices will fall so much even the government can't or is unwilling to pony up the cash to stop them.

House prices do always go up (eventually) but there can be a long wait for you to recover your money. Round my way some houses that were selling for 170k before the 2007 crash took until 2018 to recover their value in purchase terms (and are probably only now starting to recover in real terms). So yes, a buyer will probably recover their money eventually, but it could take a long time. Of course if you factor in rental costs over the same period, that probably more than cancels out the real terms part.

At the moment I live somewhere and just pay for the upkeep of the house etc so I’m lucky in that respect but I still have the feeling that it isn’t a home in that it will never be mine at the end of it all if that makes sense?

Maybe I need to do the same, keep an eye on prices for April and May, it’s hard to know which way it’s going to go currently